Considering the several European trade measures on coil imports, Italian steel trade association Assofermet expects coil sales volumes at European producers to increase in the coming months.
Grappling with high energy and raw material costs, EU steelmakers have announced a first step of increases for January delivery, with a second round expected to follow, the association says in its market note sent to Kallanish.
The climate of uncertainty caused by contracting flat steel sales volumes is persisting in the Italian market, as are low margins. End-user concern over weak demand is now compounding service centres’ difficulties with passing on downstream the coil price increases demanded by EU steelmakers. “The [coil] production curbs have not supported sales prices. Due to the contraction of sales volumes, stocks remain at high levels, while volumes ordered from non-EU producers are decreasing,” the note says.
The current weak demand for coil derivatives may only slightly improve during the first quarter of next year. Service centres remain gravely concerned over fulfilling the requirements of the Carbon Border Adjustment (CBAM) regulation. This obliges importers to declare a complex series of data to authorities about the production process, which many non-EU steel mills are not yet able to provide.
“The situation in November promises to be complex: the new conflict at Europe’s doorstep increases uncertainties, particularly regarding energy supplies which weighs heavily on the prices of steel products,” Assofermet says. While demand for coil derivatives remains weak, prices seem to have reached the bottom and, consequently, distributors are now inclined to increase their stocks in view of a possible rebound, the association concludes.